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UpWork (oDesk) & Elance Financial Forecasting Test Question & Answers

UpWork (oDesk) & Elance Financial Forecasting Test Question & Answers are really very important to pass UpWork & Elance test. You will get top score at this skill test exam. If you found any problem or wrong answer please inform me via contact or comments. We will try to solve it in short. This test is extremly valuable to acquire knowledge of this skill. Lets Start test.

Financial Forecasting Test
Ques : Which of the following is NOT an operating expense?
Ans  : Accounts Payable

Ques : Which of the following represents three possible revenue streams for an online venture?
Ans  :  Ad Revenue, Affiliate Revenue, Product Sales

Ques : Revenues on the Profit & Loss should be changed ___________________.
Ans  : through the accounting system

Ques : Which of the following parties should be kept in mind when creating a financial forecast?
Ans  : The end user

Ques : Should a summary include metrics such as Gross Margin %?
Ans  :  Yes, they are good high-level indicators.

Ques : Which of the following is the accepted format for a forecasted Balance Sheet?
Ans  : Assets, Liabilities, Equity

Ques : Which of the following would be the most useful forecasting interval?
Ans  : Monthly

Ques : The majority ownership of a private company is typically held by __________________.
Ans  : venture capital firms

Ques :  Which of the following is the accepted format for a forecasted P&L?
Ans  : Revenue, COGS, Operating Expenses

Ques : Overall, what is the purpose of a Cash Flow Statement?
Ans  : It shows how the company received and spent cash each period.

Ques : The basic formula for a Balance Sheet is __________________.
Ans  :  Assets = Liabilities + Equity

Ques :  Which of the following is the accepted format for a forecasted Cash Flow Statement?
Ans  : Net Income, Operating Activities, Financing Activities, Investing Activities

Ques : Retained Earnings reflect ____________________.
Ans  :  the cumulative Net Income for a company from inception until its last reporting year

Ques : Which of the following would be a logical arrangement for showing revenue?
Ans  : Detailed by revenue stream

Ques : A company has a post-money valuation of $500,000. The last investor put in $100,000. The pre-money valuation before the investor came in was _________________.
Ans  :  $400,000

Ques : Why does a Balance Sheet balance (assets = liabilities + equity)?
Ans  : Accounting is a double-entry system of equal debits and credits.

Ques : The primary financial statements that are forecast are _________________.
Ans  :  income statement, balance sheet, and cash flow

Ques : An operating budget in a corporate setting is usually prepared ________________.
Ans  :  for the following fiscal year

Ques : Why would a company perform a variance/sensitivity analysis?
Ans  :  To see how the forecast model changes based on changing dynamic inputs

Ques : Depreciation on the Balance Sheet reflects ___________________.
Ans  : cumulative depreciation on fixed assets

Ques : For which of the following company structures is it easiest to issue shares?
Ans  :  C Corporation

Ques : Why might someone forecast future years as one annual number?
Ans  : Because it is difficult to predict what will happen, applying a growth percentage to the year is the most reasonable assumption.

Ques : Why is it reasonable for a startup company to forecast a Net Loss for several years?
Ans  :  As the company launches and grows, expenses will often exceed any revenue-generating abilities; hence, the expected payoff will not come until future years.

Ques :  For a startup company looking to gain investor interest, which of the following seems like a reasonable amount of time to forecast ahead?
Ans  : 5 years

Ques : Is income tax forecasted?
Ans  : Yes, usually

Ques : Which of the following would NOT be included on a summary page?
Ans  : Payroll Expense

Ques : What does an increasing trend in Accounts Payable indicate for a company?
Ans  : The company is making better use of its cash and is not paying bills as quickly.

Ques : The Net Income on the Cash Flow Forecast comes from the __________________.
Ans  :  Forecasted Profit & Loss Statement

Ques : Why is Change in Accounts Payable added back to Net Income?
Ans  : There is no reason to do so.

Ques : To calculate a worst case scenario, a company would ____________ and ____________.
Ans  : decrease revenues, increase operating expenses

Ques : A capitalization summary would show ______________________.
Ans  :  Valuation, Investment, and Ownership %

Ques : In what way are the Income Statement and the Cash Flow Statement linked in a dynamic forecast?
Ans  : Net Income is carried over to the first line of the Cash Flow Statement.

Ques : Net Income on the Balance Sheet reflects _______________.
Ans  : year-to-date Net Income

Ques : What is meant by the term "post-money valuation"?
Ans  : The valuation of a company after an investment round

Ques : One method of calculating the valuation of a company is ________________.
Ans  :  Discounted Cash Flows

Ques : The purpose of a worst case analysis is to _____________________.
Ans  : show what the results would be if things do not work out as forecasted

Ques : Which of the following would most likely be included on a summary page for Balance Sheet data?
Ans  : Total Assets, Total Liabilities, Total Equity

Ques : Operating expenses should ____________________.
Ans  : be organized by department

Ques :  In what way are the Cash Flow Statement and the Balance Sheet linked in a dynamic forecast?
Ans  :  Cash from the Cash Flow Statement is carried over to the Balance Sheet cash line.

Ques : How is income tax forecasted?
Ans  :  By applying the prevailing corporate tax rate to any income for the period

Ques :  In which of the following ways would typical Rent Expense be modeled?
Ans  : Based on average rent in major metropolitan areas

Ques :   The term "burn rate" refers to ______________.
Ans  :  the total operating expenses

Ques : Capitalization is defined as ______________________.
Ans  : the capital structure of a company

Ques : In what way are the Income Statement and the Balance Sheet linked in a dynamic forecast?
Ans  : Net income is carried over to the Equity section.

Ques :  Another way to express the Balance Sheet formula is ________________.
Ans  :  Equity = Assets - Liabilities

Ques : Which of the following would one expect to be the highest expense?
Ans  : Salaries

Ques : In which of the following sections would Change in Accounts Receivable be recorded?
Ans  : Cash from Operations

Ques : Which of the following decisions could be made by looking at the Balance Sheet?
Ans  : To invest excess cash into higher-yield investments

Ques : What is meant by the term "pre-money valuation"?
Ans  : The valuation of a company before an investment round

Ques : Why is it important to create assumptions for all possible changing variables?
Ans  : It makes future updates to the model easier because the user does not need to search for numbers embedded in formulas in the financial statements.

Ques : The most logical formatting convention for assumptions would be ___________________.
Ans  :  to outline and use red text in all input cells, and to add a note at the top of the assumptions stating that only red-text cells are to be changed, with uniform formatting and assumptions placement

Ques :  Which of the following decisions would best be made by looking at cash flow?
Ans  : The decision to spend less on capital assets and pay down payables in the next period

Ques :  To be as specific as possible, a revenue forecast should  ______________.
Ans  : be detailed month by month

Ques :   Ad Revenue, which is revenue generated by placing advertisements of other companies on your site, can be modeled by  _________________.
Ans  :  figuring the average revenue per ad multiplied by the expected number of advertisement spots in a given period

Ques : In general, a financial plan can be defined as _____________________.
Ans  : a plan for spending, saving, and generating revenue

Ques :  Why would an investor be interested in a company's pre-money valuation?
Ans  :Knowing the valuation helps the investor put his investment in perspective and understand how it is relative to the capital already in the company.

Ques : In which of the following sections would a startup company record an investment by a venture capital firm?
Ans  :  Cash from Investing

Ques : In what way are the Balance Sheet and the Cash Flow Statement linked in a dynamic forecast?
Ans  : Changes in Accounts Receivable are carried over to the Cash Flow Operating Activities section.

Ques : The term "revenue driver" refers to ____________________.
Ans  : any factor that drives revenue, such as site impressions

Ques : A simple method of calculating variance is to _________________.
Ans  : apply a percentage increase/decrease to each line item on the P&L

Ques : What is the purpose of a summary page?
Ans  : It gives a quick overview of the forecasted outcomes for various financials.

Ques : Would it be better to create detailed input that individually forecasts expenses or to create a simple, one-line input for Operating Expenses?
Ans  : Detailed input: each expense grows based on different variables.

Ques :  A normal revenue model will _______________.
Ans  : increase revenues over time

Ques : For most new ventures in the process of creating a forecast, the expense that warrants the most detailed analysis and input is _____________.
Ans  : wages

Ques :  To calculate a best case scenario, a company would ____________ and ____________.
Ans  :  increase revenue streams, decrease operating expenses

Ques : What purpose does a central assumptions input tab serve in an Excel-based forecast?
Ans  : It helps create an easy-to-use spreadsheet in which all inputs are located in one place.

Ques : Naming assumption cells is helpful because ____________________.
Ans  : it allows for easier creation and tracking of formulas built into the model

Ques : Companies calculate their valuation for the purpose of  _____________________.
Ans  : using the outcome as a basis for working with investors and deciding how much equity an investment is worth

Ques : Which of the following would most likely NOT be included on summary financials?
Ans  : Accounts Payable

Ques : In a variance/sensitivity analysis, a company will typically calculate _________________.
Ans  : both best case and worst case scenarios of altered revenues and expenses

Ques : How is Cash at the beginning of the period determined?
Ans  : It is taken from the prior period's ending cash balance.

Ques : A company has a pre-money valuation of $1,000,000. An investor will invest $100,000. The post-money valuation is _________________.
Ans  :  $1,100,000

Ques : Valuation can be calculated by ____________________.
Ans  :  discounting net income for the next several years

Ques : Valuation will typically trend _______________.
Ans  :  upwards over time as the company increases sales

Ques : Why would a company be conservative when projecting revenues?
Ans  : Being conservative is better than being overly optimistic.

Ques : Valuation is a ______________________.
Ans  : result of Net Income, Sales, and Cash Flow

Ques : Another name for the Balance Sheet is ____________________.
Ans  :  Statement of Financial Position

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